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History of CD interest rates

Things are finally looking up in the US.

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Cassidy Horton

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With a fixed interest rate and little to no maintenance, a CD could be a suitable option if you have spare funds you’d like to park away. And while it’s impossible to predict what rates will do in the future, they’re currently trending up.

Historical CD rates

While rates were low and stagnant from 2013 to 2017, they’re beginning to rise again.

3-month CD6-month CD1-year CD3-year CD5-year CD
January 20100.40%0.61%0.91%1.65%2.14%
July 20100.31%0.47%0.73%1.50%2.03%
January 20110.22%0.34%0.52%1.09%1.57%
July 20110.18%0.28%0.45%0.99%1.56%
January 20120.14%0.22%0.33%0.74%1.22%
July 20120.12%0.18%0.28%0.64%1.06%
January 20130.09%0.15%0.23%0.52%0.84%
July 20130.08%0.13%0.20%0.45%0.74%
January 20140.08%0.12%0.20%0.45%0.75%
July 20140.08%0.12%0.20%0.46%0.76%
January 20150.08%0.12%0.20%0.47%0.78%
July 20150.08%0.12%0.20%0.47%0.78%
January 20160.08%0.12%0.21%0.48%0.79%
July 20160.08%0.13%0.22%0.49%0.78%
January 20170.08%0.13%0.22%0.49%0.78%
July 20170.10%0.15%0.25%0.53%0.81%
January 20180.11%0.17%0.29%0.59%0.89%
July 20180.15%0.23%0.40%0.74%1.05%
January 20190.20%0.34%0.61%0.96%1.25%
July 20190.21%0.40%0.57%0.88%1.13%
January 20200.19%0.33%0.48%0.74%0.94%
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What can we learn from looking at historical interest rates?

Looking at historical term deposit rates can help you to assess whether the current economy is favorable for you to open an account. There are many lessons we can take on board from the past, such as:

  • Rates will constantly change. The financial market is constantly changing and interest rates fluctuate alongside it. The economy works in a cycle, and with any bank account, interest rates will swing up or down depending where the economy is in that cycle. When choosing a CD, look at the current economic situation to determine whether interest rates are rising or falling.
  • Banks will offer different options. Features and options of CD accounts will vary from lender to lender. Some banks now allow you to increase the interest rate during the term if the lender’s interest rates have increased. Other lenders may also give you the opportunity to access your funds before the account reaches maturity. Make sure you check with your lender to find out if any of these flexible options will incur any fees.
  • Interest rates on CDs are competitive. Looking at both current and historical savings account rates, it’s clear that CDs offer higher interest rates than savings accounts in any economy, and CDs with longer terms offer higher interest rates.
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How historical events affect interest rates

Interest rates on CDs and other savings products are affected by the economy and by US laws.

  • The Great Depression. The stock market crash of 1929 sent the US into an economic spiral. To restore faith in banks, the US government, and specifically the FDIC, started insuring banks. Today, your deposit of up to $250,000 at any FDIC-insured bank is backed by the US government.
  • The Global Financial Crisis. After the 2008 financial crisis, interest rates began to fall. The downward trend continued for years, and interest rates didn’t start rising until 2017. As of 2020, rates are still significantly lower than they were before the crisis.
  • The rise of online banks. The rise of the Internet offered more opportunities to compare interest rates, as well as new banks that operated fully online with significantly lower overhead costs. This has led to online banks that offer interest rates significantly above the national average.

Making more of your money with a CD

While that majority of Americans (84%) say they keep their money in a standard savings account that might be a mistake as standard savings accounts traditionally only offer returns of less than 1%. CDs are a fairly popular option for savers (15%) trying to make more from their money as they offer a better return than a regular savings account.

Bottom line

The 2008 financial crisis has led to over a decade of lowered interest rates on CDs and other savings products, but rates are now trending upward. Which means that this is a good time to compare CD options and consider investing.

Frequently asked questions

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Cassidy Horton is a freelance personal finance copywriter and past contributing writer for Finder. Her writing and banking expertise have been featured in Forbes Advisor, Money, The Balance, Money Under 30, Insure.com, and other top digital publishers. She holds a BS in public relations and an MBA from Georgia Southern University. See full bio

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